NOPEC Act Is A Big Concern For OPEC Members

A proposed U.S. legislation that could pave the way for suing OPEC for market manipulation is a “big concern” among the cartel and may weigh on the message from the meeting later this week and on some members’ incentive to continue being part of OPEC, Michael Cohen, the head of energy markets research at Barclays, told CNBC on Tuesday.

“I think it’s something that could very easily weigh on the messaging of this meeting that is going to happen on Thursday and Friday,” Cohen told CNBC, when asked to comment on the proposed U.S. legislation in light of the current divisions within OPEC, especially Qatar quitting the cartel.

The proposed U.S. legislation—the so-called No Oil Producing and Exporting Cartels (NOPEC) Act—could pave the way to antitrust lawsuits in the U.S. against the cartel and its national oil companies, if passed.

Forms of antitrust legislation aimed at OPEC were discussed at various times under Presidents George W. Bush and Barack Obama, but they both threatened to veto such legislation.

In May this year, the NOPEC Act was introduced again. Such legislation would make OPEC subject to antitrust laws by removing a state immunity shield created by judicial precedent.

Given U.S. President Donald Trump’s continued criticism of OPEC and the way the cartel manipulates the oil market and prices, OPEC members are concerned that the legislation may pass this time around.

“It is certainly possible that a country that is looking to enhance or burnish its ties to the United States may look at the NOPEC legislation and say: ‘Well, we don’t want to be a part of this organization anymore,’” Cohen told CNBC today.

OPEC is also said to have urged all its members not to mention specific oil prices, and to instead stick to the ‘market stability’ narrative in public comments about oil policies to avoid the risk of potential U.S. antitrust lawsuits for manipulating the market if the United States passes the legislation.